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Company and Marketing Strategy - Partnering to Build Customer Relationships Chapter 2 Rest Stop: Previewing the Concepts • Explain companywide strategic planning and • • its four steps Discuss how to design business portfolios and growth strategies Explain marketing’s role in strategic planning and how marketing works with its partners to create and deliver customer value Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2-2 Rest Stop: Previewing the Concepts • Describe the elements of a customer-driven • marketing strategy and mix, and the forces that influence it List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing return on marketing investment Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2-3 First Stop - McDonald’s: A CustomerFocused “Plan to Win” Strategy • Loss of identity • Rapid expansion causes McDonald’s to lose product focus • Faces criticism for nutritional quality and service standards • The turnaround • From “being the world’s best quickservice restaurant” to “being our customers’ favorite place and way to eat” • Increase in share price, sales, and profits Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2-4 Strategic planning • The process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2-5 Figure 2.1 - Steps in Strategic Planning Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2-6 Mission statement • A statement of the organization’s purpose— what it wants to accomplish in the larger environment Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2-7 The Mission Statement • Questions the mission statement should answer • • • • What is our business? Who is our customer? What do consumers value? What should our business be? • Mission statements should be marketoriented, not product-oriented Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2-8 Fuel for Thought Evaluate the following mission statement for a real estate agency against the criteria previously discussed: “We sell houses and commercial property.” Rewrite the mission statement. Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2-9 Setting Company Objectives and Goals • The mission should be translated into supporting objectives for each level of management • Marketing strategies and programs must be developed to support these objectives Heinz ties its diverse product portfolio together under the mission: “As the trusted leader in nutrition and wellness, Heinz—the original Pure Food Company— is dedicated to the sustainable health of people, the planet, and our company” Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 10 Business portfolio • The collection of businesses and products that make up the company Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 11 Designing the Business Portfolio • The company must • Analyze its current business portfolio or strategic business units (SBUs) and decide which SBUs should receive more, less, or no investment • Develop strategies for growth and downsizing that will shape the future business portfolio Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 12 Marketing at Work • ESPN’s business portfolio includes • • • • • Television Radio Digital media Publishing Event management Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 13 Portfolio analysis • The process by which management evaluates the products and businesses that make up the company Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 14 Portfolio Analysis • Purpose of portfolio analysis • To direct resources toward more profitable businesses while phasing out or dropping weaker ones • Basis of evaluation • Attractiveness of SBU’s market or industry • Strength of SBU’s position within that market or industry Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 15 Figure 2.2 - The BCG Growth-Share Matrix Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 16 BCG Growth-Share Matrix • Strategies for categories of the BCG Matrix • Stars need heavy investments to finance their rapid growth • Cash cows need less investment to hold their market share • Question marks require a lot of cash to hold their share, let alone increase it • Dogs do not promise to be large sources of cash Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 17 Figure 2.3 - The Product/Market Expansion Grid Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 18 Market penetration • Increasing sales of current products to current market segments without changing the product Market development • Identifying and developing new market segments for current company products Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 19 Product development • Offering modified or new products to current market segments Diversification • Starting up or acquiring businesses outside the company’s current products and markets Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 20 Developing Strategies for Growth • Under Armour has grown at a blistering rate under its multipronged growth strategy Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 21 Downsizing • Reduces the business portfolio by eliminating products of business units that are not profitable or that no longer fit the company’s overall strategy • Reasons for downsizing • • • • Rapid growth of the company Lack of experience in a market Change in market environment Decline of a particular product Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 22 Planning Marketing • Marketing plays a key role in strategic planning by • Providing a guiding philosophy for the company strategy • Providing inputs to strategic planners • Designing strategies to help individual business units reach their objectives Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 23 Creating Customer Value • Marketers must practice partner relationship management • Working with partners internally within the company can create an effective value chain • Working with external partners in the marketing system helps to form a superior value delivery network Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 24 Value chain • The series of internal departments that carry out value-creating activities to design, produce, market, deliver, and support a firm’s products Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 25 Partnering with Other Company Departments • Wal-Mart’s ability to help buyers “Save money. Live better” depends on the contributions of its value chain – people in all of the company’s departments Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 26 Value delivery network • The network made up of the company, its suppliers, its distributors, and, ultimately, its customers who partner with each other to improve the performance of the entire system Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 27 Marketing strategy • The marketing logic by which the company hopes to create customer value and achieve profitable customer relationships Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 28 Figure 2.4 - Managing Marketing Strategies and the Marketing Mix Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 29 Market segmentation • Dividing a market into distinct groups of buyers who have different needs, . characteristics, or behaviors, and who might require separate products or marketing programs Market segment • A group of consumers who respond in a similar way to a given set of marketing efforts Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 30 Market targeting • The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 31 Positioning • Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers Differentiation • Actually differentiating the market offering to create superior customer value Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 32 Market Differentiation and Positioning • Burt’s Bees offers “Earth friendly natural personal care products for The Greater Good”, a deceptively simple statement that forms the backbone of its marketing strategy Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 33 Marketing at Work • Allegiant’s “Go where they ain’t” strategy focuses on serving niches neglected by competitors • Targets customers who might not otherwise fly Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 34 Marketing mix . • The set of tactical marketing tools— product, price, place, and promotion— that the firm blends to produce the response it wants in the target market Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 35 Figure 2.5 - The Four Ps of the Marketing Mix Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 36 The 4 Ps and the 4 Cs of the Marketing Mix • 4 Ps - Seller’s view • 4 Cs - Buyer’s view • • • • Product Price Place Promotion • • • • Customer Solution Customer Cost Convenience Communication Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 37 Figure 2.6 - Managing Marketing: Analysis, Planning, Implementation, and Control Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 38 Figure 2.7 - SWOT Analysis Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 39 Contents of a Marketing Plan • • • • • • • • Executive summary Current marketing situation Analysis of threats and opportunities Objectives and issues Marketing strategy Action programs Budgets Controls Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 40 Fuel for Thought • External factors – including trends stemming from the economic, technological, social, legal-political, and competitive environments – may represent threats or opportunities to many businesses How have recent technological changes impacted the marketing of various goods and services? Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 41 Marketing implementation • Turning marketing strategies and plans into marketing actions to accomplish strategic marketing objectives Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 42 Organizing Marketing Departments • Functional organization • Each marketing activity is headed by a functional specialist • Geographic organization • Sales and marketing people are assigned to specific countries, regions, and/or districts Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 43 Marketing Department Organization • Product management organization • One person is given responsibility for complete strategy and marketing program for a single product • Market or customer organization • Manager responsible for particular market or type of customer (e.g., government buyers) • Combination organization • Uses some combination of the previous four approaches Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 44 Marketing control • Measuring and evaluating the results of marketing strategies and plans and taking corrective action to ensure that the objectives are achieved Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 45 Marketing Control Operating control • Evaluates performance against the annual plan and takes corrective action Strategic control • Evaluates whether strategies match opportunities Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 46 Return on Marketing Investment • The net return from a marketing investment (Marketing ROI) divided by the costs of the marketing investment • Marketing ROI is assessed using • Standard marketing performance measures • Brand awareness, sales, market share • Customer-centered measures • Customer acquisition, customer retention, customer lifetime value, customer equity Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 47 Figure 2.8 - Return on Marketing Investment Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 48 Rest Stop: Reviewing the Concepts • Explain companywide strategic planning and • • its four steps Discuss how to design business portfolios and growth strategies Explain marketing’s role in strategic planning and how marketing works with its partners to create and deliver customer value Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 49 Rest Stop: Reviewing the Concepts • Describe the elements of a customer-driven • marketing strategy and mix, and the forces that influence it List the marketing management functions, including the elements of a marketing plan, and discuss the importance of measuring and managing return on marketing investment Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 50 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2013, Pearson Education Inc., Publishing as Prentice-Hall 2 - 51